airport systems planning rdn multi-airport systems in era of low-cost carriers dr. richard de...

Airport Systems Planning RdN

Multi-Airport Systems in Era of Low-Cost Carriers

Dr. Richard de Neufville

Professor of Engineering Systems and of Civil and Environmental Engineering

Massachusetts Institute of Technology


Theme

“Low cost” airlines are developing a “parallel network” of travel

“network choice” (rather than “airport choice”) may determine traffic in multi-airport systems

Competition between “low cost” and “legacy” airlines leading to struggle between “low cost” and “legacy” hubs Boston/Logan vs. Boston/Providence, etc., etc.


What is a Multi-Airport System?

the significant airports serving transport in a metropolitan region, without regard to ownership or political control Ex: Boston, Providence, Manchester Ex: Copenhagen (Denmark), Malmo (Sweden)

Discussion This is reality for travelers Contrasts with focus on ownership (as used by

ACI – Airports Council International, and others)


Discussion of Tables 1 – 4derived from de Neufville database

Table 1: Except for very crowded situations, secondary airports are a small fraction of total at airport with most passengers. This reflects concentration factor …

Table 2: Catalog of Major Secondary AirportsTable 3: MAS ranked by Estimated Number of

Originating Passengers, eliminating transfers This focuses on a Major Driver of MAS

Table 4: Potential MAS, mostly driven by Low-Cost airlines. New ones constantly emerging…


Planning Issue

Many ‘mistakes’ in planning multi-airport systems Washington/Dulles – planned as major DC

airport, but had only ~ 3 MAP for 20 years London/Stansted – similar story – only

developed with Ryanair hub around 2002 Osaka/Kansai – Osaka/Itami did not close Montreal/Mirabel – huge airfield, now

“closed” to passenger traffic Et cetera…


Why mistakes happened

Failure to appreciate traffic concentration at primary airports

… Because planners/forecasters using wrong mental model


What drives traffic allocation in Multi-Airport System?

Airline competition has been primaryS-shaped market share/frequency share

Drives airlines to Match flights => Allocate flights to major markets Concentrate Traffic at primary airports

Frequency Share

MarketShare


Right model: “Concentration” not “Catchment Areas”

Concentration is standard urban phenomenon e.g.: financial, jewelry, etc. districts

Driven by what suppliers offerCustomers choose which location

(airport) depending on where they find what they need -- not just most convenient facility


“Concentration” persists --until high level of local traffic

When local originating traffic high…More flights add little at major airportsAirlines place flights at second airportsThere appears to be a ‘threshold”…Currently ~ 16 million originations/year

Note: higher as “average” aircraft carries more passengers, larger aircraft or higher load factor


New Reality: No-frill airlinessetting up “parallel network”Low-cost carriers “parallel” majorsMajor fare distinctionsTicket distribution separate

Internet direct to users, ‘no’ travel agents

Parallel service between cities Providence/Baltimore not Boston/Washington

‘No’ interlining of bags, tickets‘Not’ in Reservation systems


Metropolitan areas with significant multi-airport systems

de Neufville data base for 2007

Traffic in Millions Metropolitan Region For Region Originating

Multi-Airport System

London 137 52 Yes New York 106 43 Yes Tokyo 99 42 Yes Los Angeles 85 37 Yes Paris 84 32 Yes Chicago 100 30 Yes Hong Kong 67 27 Yes Miami 59 25 Yes San Francisco 57 24 Yes Washington/Baltimore 61 21 Yes Shanghai 43 19 Yes Seoul 42 19 Yes Moscow 37 18 Yes Osaka 38 17 Yes


Metropolitan areas with significant multi-airport systems

de Neufville data base for 2007

Traffic in Millions Metropolitan

Region For Region Originating Multi-Airport

System Bangkok 42 17 Yes Beijing 49 17 Boston 36 17 Yes Sao Paulo 35 17 Yes Milan 37 16 Yes Manchester (UK) 35 16 Yes, low-cost Las Vegas 45 16 Taipei 33 15 Yes Barcelona 35 15 Yes, low-cost Amsterdam 48 15 Yes, low-cost Frankfurt 57 15 Yes, low-cost Mexico City 36 15 Yes Atlanta 84 15 Jakarta 32 15


Major exceptions to rule: technical or political

Until recently, major exceptions to concentration rule were:

Technical -- runways too short Belfast, Belo Horizonte, Buenos Aires,

Rio de Janeiro, Taipei

Political -- or military... Berlin, Dusseldorf/Bonn, Glasgow, Moscow


New Reality: No-frills choose different airports

Southwest, Westjet (Canada), Ryanair and Easyjet (UK) require: Cheap properties, no Taj Mahals (compare

San Francisco/International and Oakland; London/Gatwick and Luton)

Low congestion and delays Flexible work force

They find this at aggressive, ‘hungry’ airports -- not in major facilities


New Reality: US/Canada Network of Low-Cost Carrier Airports

Metropolitan Region

Secondary Airport

Low-Cost Carrier

Manchester Southwest Boston Providence Southwest

Dallas/Ft. Worth Love Field Southwest Houston Hobby Southwest Los Angeles Long Beach Jet Blue Miami Ft. Lauderdale Southwest San Francisco Oakland Southwest Vancouver Abbotsford Westjet


New Reality: Europe Network of Low-Cost Carrier Airports

Metropolitan

Region Secondary

Airport Low-Cost

Carrier Brussels Charleroi Ryanair Copenhagen Malmo Ryanair

Weeze Ryanair Düsseldorf

Köln / Bonn easyjet Frankfurt Hahn Ryanair Glasgow Prestwick Ryanair

Luton easyjet London

Stansted Ryanair Manchester Liverpool easyjet Milan Orio al Serio Ryanair Oslo Torp Ryanair Paris Beauvais Ryanair Rome Ciampino Ryanair + easyjet Stockholm Skvasta Ryanair


Multi-Airport Systemsin Brazil

Airport

International, Distant Domestic, Close-in

Metropolitan Region

Name Traffic

Millions Name

Traffic Millions

Sao Paulo Garulhos 15.8 Congonhas 18.5 Rio de Janeiro Galeao 8.9 Santos Dumont 3.6 Belo Horizonte Confins 3.7 Pampulha 0.8

Source: Infraero; de Neufville database 2007


Importance of Parallel Networkof close-in Brazilian airports

Airport Pair Passengers,

1000s

Rank

Congonhas Santos Dumont 1461 1

Congonhas Brasilia 596 2

Congonhas Pampulha 565 3

Congonhas Curitiba 551 4

Congonhas Porto Allegre 365 5

Garulhos Salvador 364 6

Santos Dumont Brasilia 325 7

Santos Dumont Pampulha 312 8

Source: INFRAERO, 2002, Rabbani, 2002


Implications for modelling future of second airports

A new driver for second airports... Low-cost carriers often ‘not’ competing at big

airports Frequency competition does not drive growth

pattern of secondary airports

Competition between networks may be primary…

… followed by catchment area model of airport choice


Implications for future of second airports

No-frills airlines are becoming ‘major’ Southwest 2nd largest airline in world (pax) Market Cap ~ 10 billion $ > any other pax airline Ryanair Market Cap greater than British Airways

Majors are shrinking (UAL, USAir, etc.)Implies that Primary airports will lose

significant traffic to second airportsThis is already happening!!!


Southwest entry in Boston market grew second airports

Figure 1: New England traffic growth shifted from Boston/Loganto Regional Airports along with growth

of Southwest at Providence and Manchester (NH)

P age 3

R eg io n a l A irp o rts

23 %

(+ 0 .7M )

L o g an

77 %

(+ 2 .3 M )R eg io n a l A irp o rts

76 %

(+ 7 .2M )

L o g an24 %

(+ 2 .3M )

1990–1996 1996–2000

+2 .9 M illio nA ir P assen g ers




D is trib u tio n o f N ew E n g lan d P assen g er G row th

R eg iona l a irpo rts inc lude P rov idence , M ancheste r, W orces te r, B an gor, B u rling ton , H a rtfo rd , N ew H aven , and P o rtland .

S ource : A irpo rt R eco rds and U S D O T , F o rm 41 schedu les .

Since 1996, the Regional Airports Have Captured More than 75% of the Region’s Air Passenger Growth

Figure 4

Source: Louis Berger, New England Regional Aviation System Plan materials


Market Share of Boston/Logan is in decline

F i g u r e 2 : T h e B o s t o n / L o g a n t r a f f i c s h a r e d r o p p e d b y a q u a r t e r o v e r t h e p a s t 2 0y e a r s ; h a l f o f t h i s o c c u r r e d w i t h t h e S o u t h w e s t g r o w t h i n t h e l a t e 1 9 9 0 s a tP r o v i d e n c e a n d M a n c h e s t e r ( N H )

P a g e 4

5 0 %

6 0 %

7 0 %

8 0 %

'8 0 ' 8 1 '8 2 '8 3 ' 8 4 '8 5 ' 8 6 '8 7 '8 8 ' 8 9 '9 0 '9 1 ' 9 2 '9 3 '9 4 ' 9 5 '9 6 ' 9 7 '9 8 '9 9 ' 0 0

L o g a n ' s S h a r e o f N e w E n g l a n d A i r P a s s e n g e r s

N o t e : I n c l u d e s e n p l a n e d p a s s e n g e r s a t L o g a n , H a r t f o r d / B r a d l e y , T . F . G r e e n / P r o v i d e n c e , M a n c h e s t e r , P o r t l a n d , B u r l i n g t o n , B a n g o r , T w e e d N e w H a v e n , a n d W o r c e s t e r .

S o u r c e : U S D O T , F o r m 4 1 a n d P a r t 2 9 8 / C . A i r p o r t r e c o r d s f o r L o g a n a n d v a r i o u s r e g io n a l a i r p o r t s .

7 8 %

5 9 %

T h e R egio n is Less R elian t o n Lo gan A irp o rtFigu re 5

Source: Louis Berger New England Regional Aviation System Plan

The 2004 Share is about 57% (SH&E, ’05)


Summary

A new, parallel air transport network is emerging to compete with majors

This low-cost carrier network may become a major feature of industry

It implies growth and importance of low-cost second airports throughout North America, Europe -- and perhaps elsewhere


Supplemental Comment

Meanwhile, a similar development is taking place in air cargo

Fedex and UPS are developing their own networks of cargo airports

Fedex: Memphis, Toronto/Hamilton, San Francisco/ Oakland, etc.

UPS: Louisville, Los Angeles/Ontario. Chicago/Rockford, etc.

airport systems planning rdn multi-airport systems in era of low-cost carriers dr. richard de...

Documents

airport choice

location airport

major dc airport

traffic concentration

significant airports

legacy airlines

lowcost airlines

major driver of mastable